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Meriton's war of World Tower

Su-Lin Tan

''I have been treated with suspicion - there is no transparency'' … Daniel Comarmond outside the World Square tower. Photo: Tamara Dean

IT IS, in Harry Triguboff's own words, ''the jewel in the Meriton crown''. But World Square - with Meriton's glittering skyscraper World Tower at its heart - is in turmoil.

Locks have been changed, security guards installed and Meriton and its investors are trading blows via their lawyers.

The owners' corporation of the World Tower apartments is accusing Meriton of neglect and breach of contract over building defects and maintenance issues worth more than $1 million.

But, in turn, the owners' corporation faces allegations that it is wasting hundreds of thousands of dollars in strata levies in fighting the company.

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Through official documents, the secretary of the owners' corporation, King Chen, says Mr Triguboff's company has turned a blind eye, not only to maintenance problems but to dangerous overcrowding, with many apartments filled with sub-divided bedrooms and overseas students.

Strata minutes accuse the company of helping to fuel the problem by issuing 9500 swipe cards to the building without authority between 2004 and 2011. (There are 236 residential units in the tower.)

They even say Meriton employees have misappropriated some of the $100 to $150 deposits paid on each card.

A Herald investigation has discovered that Meriton has been served with at least 15 official breach notices and formal complaints in the past two years.

Meriton awarded itself the caretaker contract - worth $2.13 million a year - for 10 years after it completed the development in 2004.

The breach claims spell out flooding problems caused by shoddy work, malfunctioning lifts that frequently trapped residents and defective swipe-card systems that locked residents out of the building.

An independent review commissioned by the owners' corporation identified more than $1 million in serious defects in the construction of the building.

''Many essential fire safety systems have been found to be faulty and in a state of neglect … consequently City of Sydney council is carrying out investigations to the entire World Tower,'' strata documents say.

The council has confirmed its own inspections last year revealed a range of maintenance issues, including fire safety defects under the building code.

The owners and Meriton are already embroiled in three cases in the NSW Supreme Court.

The owners' corporation and Meriton are suing each other over building defects, caretaker's fees and a building lock-out.

The dispute came to a head last July when the residential section of the building voted at its annual meeting to terminate Meriton's maintenance contract.

(The lower floors are offices and shops, and the upper floors Meriton serviced apartments.)

The owners' corporation has sent circulars to residents saying, ''we pay Meriton significant fees to manage our building and we expect better. These actions from Meriton must stop''.

The corporation has so far spent more than $100,000 from its sinking fund on legal fees.

It receives levy income of more than $1.5 million a year and has a balance of at least $1 million in its bank account each year.

Meriton, which has denied all the allegations, has refused to acknowledge the owners' corporation's vote to terminate the caretaker contract.

''The caretaker agreement is for all three sections of the tower and this is a very complicated building.

''There are easements, rights and obligations in place and fixing shared facilities must be agreed by all three parties,'' said Meriton's general counsel, Katerina Mihail.

''There are no instances that Meriton is aware of where it has received instructions on behalf of all three owners' corporations, and hasn't acted on them.''

Ms Mihail said the company was not to blame for the overcrowding, adding that it took the problem ''very seriously'' by monitoring the building and reporting any breaches to the strata manager.

''The caretaker has no power to enforce the by-laws relating to overcrowding.''

But BCS Strata Management, whose contract was terminated in November, said it could act only on instructions from the owners' corporation.

''BCS has a strong record of assisting the owners' corporation … and ensuring the action they take is in compliance with legislation.''

Neither BCS nor the owners' corporation would say why the contract was terminated. BCS has been replaced by Change Strata Management.

Friction between Meriton and the residential investors dates back to 2008 when tempers began to fray over overcrowding.

''We feel that Meriton did not do a good enough job because they were unable to prevent overcrowding in the apartments,'' said an owner and resident, who refused to be named.

''They are also using the building lobby for Meriton's serviced apartment business. This caused the lobby to be crowded during peak hours, at owners' expense.''

As overcrowding escalated, owners demanded logs of security cards to control access to the building but Meriton failed to provide them. It says electronic records of cards and deposits ''no longer exist''.

Since November 2011, the owners' corporation has employed security guards at $300 a day to manage the movement of residents in and out of the building.

It has had CCTV installed to monitor the level of movement in the lifts and had new security doors put in the shared lobby.

The extra security has come at a price - $253,000 a year to owners. Meriton said the lift problems were a ''glitch'' but the owners' corporation claims Meriton's employees refused to co-operate with workers from Schindler Lifts.

In September 2011, level 43 was flooded when Meriton contractors were working on the water meters. The flooding caused extensive damage.

Meriton has begun to take action to tackle the problems, lodging several development applications in September.

But these focus solely on the sections of the building in which Meriton has a direct interest - the upper floors where its serviced apartments business operates, and the lower floors where it is still a member of the strata plan.

There are no public documents showing plans by Meriton to repair the residential section. But strata minutes show the owners' corporation has hired fire engineers to repair the defects with the intention of billing Meriton for the costs.

For its part, Meriton has accused the corporation of duplicating costs and is suing it in the Supreme Court for barring its access to the building.

''The injunction was sought because of concerns the actions by the residential owners' corporation jeopardised the safety of other owners.

''Many of the systems in the building are linked and must be maintained in a co-ordinated fashion,'' a spokesman said.

Mr Chen, who has refused to comment, has collected hundreds of proxies to support his fight against Meriton but stands accused by some owners of wasting the strata fees - about $5000 a year for each unit - on legal costs.

An investor-owner, Daniel Comarmond, said: ''It's pretty disgusting. The executive committee has been going on about these issues with Meriton for so long. I am not convinced the executive committee is working in the interest of all owners.

''My requests for financials from the owners' corporation via the strata company have been ignored. I have been treated with suspicion. There is no transparency to the money spent by the executive committee or the legal battles that are happening.''

The value of Mr Comarmond's unit has also dropped 3 per cent in the past year.